NFT is more popular than Bitcoin, you should know what it is

With those emoticons, videos, and pictures that can be seen everywhere on the Internet, they have been sold at “sky prices.” NFT is becoming another encrypted digital currency that has been out of the circle on a large scale after Bitcoin.

Coin World-NFT is more popular than Bitcoin, you should know what it is

The little girl in the above picture made this picture of her “disaster girl” into an NFT and sold it for $504,000.

With those emoticons, videos, and pictures that can be seen everywhere on the Internet, they have been sold at “sky prices.” NFT is becoming another encrypted digital currency that has been out of the circle on a large scale after Bitcoin.

Everything can be NFT, you should know what it is.

1|NFT is unique and irreplaceable

The full name of NFT in English is Non-Fungible Token, and in Chinese it is called non-fungible token, a type of digital cryptocurrency.

NFT, like Bitcoin, is recorded on distributed accounts on the blockchain. Unlike Bitcoin, each NFT is unique and irreplaceable.

We can understand this difference this way. You have one bitcoin, and I have one bitcoin. We exchange each other, which means there is no exchange. The numbers in our accounts have not changed, and no one loses.

But for the same cryptocurrency, NFT is different. You have an NFT, I have an NFT, we can exchange each other, but we will not do this, because you may lose a lot.

Would you like to exchange an emoji package with me with a poster signed by your star? Both posters and emoticons signed by the stars can be made into NFTs. These two NFTs are exchanged with each other. Obviously, it does not mean that there is no exchange.

This example is to help us understand the unique characteristics of NFT, which is determined by its technology, and we will not expand.

Bitcoin is a native currency. Musk mentioned that Bitcoin is a kind of gold and a substitute for cash. Although this view is open to discussion, at least it is very vivid.

NFT is a token that provides a way to mark the ownership of native digital assets. A simple and crude understanding is that NFT marks who owns a certain digital asset. It is a “voucher” that can replace the digital asset itself for trading and circulation. Trading NFT means trading the ownership of digital assets.

Since NFT is unique, it is also unique as a “voucher”. The NFT is recorded on the distributed account of Ethereum, which ensures the safety and reliability of the “vouchers” and the “permanence” in a certain sense.

2|Is the “Mona Lisa” in the Louvre real?

NFT became popular in the art collection circle. Today, the works of artists and creators are often digital works, such as a song, a painting, and a film. Anyone can copy and paste these works to get exactly the same one. There is no concept of authenticity here, and copyright and ownership are also unclear. This is a “bug” of the Internet.

This is also the reason for using NFT to mark the ownership of digital assets.

The Mona Lisa in the Louvre is an authentic one, and the others are all photocopies. No one will buy a photocopy for the price of an authentic one because we are sure that the one we are going to sell to us is not genuine. The certainty here is very important, and NFT gives this certainty to digital works. (Off-topic, in fact, we only tend to believe that the works in the Louvre are true. We are not sure whether it is true or not. NFT also covers this uncertainty.)

The well-known art auction house Christie’s made “Every Day: the First Five Thousand Days” of the post-80s online artist Beeple’s work into an NFT, and sold a sky-high price of US$69.3 million.

Ten NFT paintings by Musk’s girlfriend Grimes sold for $5.8 million in 20 minutes.

Twitter co-founder Jack Dorsey put his first 5-word tweet in 2006 into an NFT auction and sold it for $3 million.

NBA stars sell classic game videos as NFTs. Every time these NFTs are resold, the stars will get income…

The paintings, tweets, and videos mentioned in these examples can be watched by all netizens and copied and pasted into their computers. However, because they have been pasted by the NFT, these netizens copy and paste them into a kind of “copy”. What is traded is—the valuable part—the copyright and ownership of these works marked by the NFT. The “bug” of the Internet has been resolved.

3|Make valuable “sand” an asset

Having said that, you may feel that something is wrong, because it sounds like NFT is a bubble machine that virtualizes demand and then circulates money wildly!

It doesn’t matter. While doubting, we do a few judgment questions: Is the first tweet (weibo) in Internet history valuable and meaningful? If you are rich enough, if you can buy the first Chinese in the Internet world, are you willing? Even for the first time in human history, are they “valuable”?

We can understand the meaning of NFT in this way. The above tweet with only 5 words is the first tweet in the world. It is meaningful, but it is submerged in the huge amount of information on the Internet, like a grain of sand on the beach. After the NFT mark, these “sand” that was consumed meaninglessly became a heritage asset and a cultural relic.

We continue to do thinking questions. Why do the numbers in Alipay and WeChat wallets represent how much money you have? Because we believe in the “ledgers” of Alipay and WeChat, enough people believe in the “ledgers” of Alipay and WeChat.

The logic of the high-priced paintings above is like this. Anyone can use a digital painting, but the original creator does not get any revenue. But when it is made into NFT, every transaction becomes a transaction of ownership (or right to use). This is equivalent to the Mona Lisa in the Louvre being sent to your living room after the transaction, even though there are replicas of the Mona Lisa everywhere in the world.

The key here is how many people recognize it and whether enough people believe in this set of “ledgers.”

Fortunately, the distributed ledger represented by blockchain technology is being accepted by more and more people. The wealth of distributed applications such as NFT and DeFi has exploded. The trading volume of the NFT market in February this year exceeded 340 million US dollars. By comparison, the total sales for the whole year of 2020 was only 150 million US dollars. In 2020, the total wealth of Defi on the chain is US$400 million, and it has been US$80 billion this year.

4|Transactions are open and transparent, “everything on the chain” speeds up

Since the NFT transaction is open and transparent, you can check when the NFT transaction started, who bought it later, how much money it spent, and who ended up with the transactions mentioned above.

As you can imagine, the value of NFT goes far beyond digital art collections. Imagine that after an NFT community has enough trust and consensus, all things circulating in this community are “real” things.

When we judge whether a thing is worth or not popular, we often look at traffic. Unfortunately, today we can no longer judge how much traffic is real. The asymmetry of artificially created information makes “cutting leek” happen frequently.

As the application of NFT penetrates into our lives, under bold conjecture, the future houses, physical goods, and life services will circulate through NTF, the transaction will be transparent, the value will be given to supply and demand, and the information asymmetry will be minimized.

E-commerce companies with serious orders have affected our purchasing decisions. If they are confident that the platform will put products on the chain, and cannot order orders and transparent transactions, it may be able to extend a market where good coins drive out bad coins.

NFT is built on the public chain, and merchants can view transaction records of related products. The user portraits drawn here may be clearer than big data. If you have confidence in your product, it is better to airdrop the link directly to them, and they will check the merchant’s transaction records in reverse, and either hit it off or reject each other, which is simple, accurate, and efficient.

Concluding remarks

At present, there is a big bubble in the sky-high prices of NFT transactions. This is determined by the current development stage of the NFT. It is also helping to build trust in this market, broaden boundaries, and confirm liquidity.

Source: Bitcoin House

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